What Is Supplier Relationship Management (SRM)?

What Is Supplier Relationship Management (SRM)?

Supplier relationship management (SRM) is a way to manage work with vendors who are supplying goods, materials and/or services to a manufacturer. It involves evaluating each of those relationships and figuring out how to strategize to improve their performance. SRM is used by professionals involved in managing supply chains and is often referred to as supply chain management. It differs from vendor management and procurement processes in that costs and service agreements between vendors and organizations are the aim of vendor management, while procurement deals with the ordering, contracting, invoicing and paying off procurements.
Supply relationship management (SRM) is a technique used by companies to increase efficiency and profits. It provides cost savings by finding a mutually beneficial relationship to save money over the long term. It also helps with reducing availability issues, delays, problems in the quality of materials and more, which ultimately helps customers. Additionally, having relationships with suppliers avoids problems that might otherwise arise due to poor or lacking communication. Finally, it reduces price fluctuation by setting a price for materials and offering fixed pricing if the manufacturer is willing to sign a long-term contract.